The computer market has been through a
very tough year with consumers and businesses simply not buying due
to the poor economy. This has led to some heavy losses for some in
the computer industry. The economy is slowing starting to come back
and the launch of Windows 7 is expected to drive some upgrades in the
2010.

The CPU
market grew by 23% showing that computers were shipping in larger
numbers in Q3 2009. The same quarter, Acer was able to kick
Dell out of the second place spot in the top global PC shippers
list. Dell announced its Q3 financials and outlook for Q4 this week
and while trying to be upbeat, the Q3 numbers were not great compared
to 2008.

EWeek reports that Dell saw its profits
drop 54% for the quarter compared to 2008. Net income for the
quarter was $337 million; net income in Q3 2008 was much higher at
$727 million. Despite plummeting revenue, Dell is upbeat for
Q4.

Dell CFO Brian Gladden said that the quarterly results
were "showing some encouraging signs for us, especially in our
large enterprise and SMB businesses, where we had sequential growth
for the first time in seven quarters."

Things look better
on a per category basis for Dell with its large enterprise revenue
growing 4% compared to Q2 to $3.4 billion. Revenue from small and
mid-size businesses was $3 billion, up 5% from the previous quarter,
but down 10% from the same quarter in 2008.

Dell is looking
forward to continued growth in Q4 in part thanks to expected consumer
upgrades from the launch of Windows 7. Gladden said, "We built
more backlog than normal due to [Windows 7's] late-quarter release,
and the order dynamics that we saw during the end of October."

Dell
is still continuing its aggressive cost cutting measures, which so
far have included layoffs
and plant closures. These cost cutting methods are likely to be
leveraged next year with very aggressive pricing on enterprise PCs
and servers to allow dell to aggressively gain market share according
to analysts.

Technology Business Research analyst John Spooner
said, "Despite lackluster business PC and server unit sales
numbers in its 3Q09, TBR expects Dell to leverage its recent cost
cuts … to fund aggressive PC and server pricing during the expected
corporate PC upgrade cycle in 2010. We believe Dell has been laying
the groundwork for this move for some time. In fact, it will leverage
its lower costs to provide aggressive hardware pricing to large
enterprise customers in order to win in large bid situations. At the
same time, Dell will gain the opportunity to attach additional items,
including its storage and newly acquired Dell/Perot Systems services,
with large PC and server deployments."

The cost savings
measures are expected to allow Dell to reduce the costs of its
products enough that it can win large bid contracts that it can then
turn around and bundle with services such as those provided by the
Perot Systems company that it acquired in September.

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs